The ________ model provides a single measure (return)but must apply risk outside the model,thus allowing for errors in rankings of projects.
A)Payback Period
B)IRR
C)Net Present Value
D)Profitability Index

Question

Quizplus · Accepted Answer

The Internal Rate of Return (IRR) model focuses on finding a single rate of return that makes the net present value of all cash flows from a particular project equal to zero. However, it does not inherently account for the risk associated with the project's cash flows, requiring risk considerations to be applied externally to the model. This can lead to potential errors in project rankings, especially when comparing projects with different risk profiles.

The ________ Model Provides a Single Measure (Return)but Must Apply